NEW YORK (TheStreet) -- Germany-based life science company Bayer (BAYRY) and U.S. seed giant Monsanto (MON) announced a merger agreement on Tuesday morning worth $66 billion. Monsanto agreed to be acquired by its rival after Bayer upped its bid for a third time.
Bayer will pay $128 per Monsanto share, valuing the company at $56 billion. Bayer will also be assuming about $10 billion in debt. The deal is expected to close at the end of 2017, however some investors are concerned that antitrust issues will stop the merger from completing.
Monsanto CEO Hugh Grant and Bayer CEO Werner Baumann appeared on BloombergTV's "Bloomberg Markets" on Tuesday morning to discuss the newly announced combination. The merger creates the world's biggest seeds and pesticides supplier.
"One thing that is most important to see is, what is needed in order to support farmers in addressing an ever increasing demand for more output and more yield. And the only way that can be done is with better innovative solutions that have to be developed and we share a vision...that the combination of both companies...would be a great combination to help address this," CEO Baumann said.
The two companies are looking to innovate as a way to help farmers that are looking to produce in a more environmentally stable way.
Bloomberg reporter Jeff McCracken questioned Monsanto CEO Grant about any regrets he may feel that the company was acquired, rather than having made an acquisition itself. McCracken mentioned the company trying last year to do a deal with Syngenta (SYT).
"The way I look at it is the strategy is the same, that's been consistent throughout," Grant said, responding that he doesn't feel regret the company was acquired.
"It's an industry that's gone through consolidation. So the way I look at this, we're going to unlock additional yields for growers around the world. They're starving for innovation, they're looking for answers. The combination of the two companies unlocks that potential going forward," Grant continued.
Moving on to concerns that the deal will run into antitrust issues and eventually be terminated, both CEOs looked to quell investor concerns on this issue, and are confident the deal will go through.
"Regulatory challenges have been discussed very, very intensively as part of our negotiations," Baumann said.
Both companies tasked teams of people to look into what sort of regulatory issues might come up.
"This combination is one that is highly complementary and has, for the size of this transaction, a very, very low overlap," Baumann said.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate MONSANTO CO as a Hold with a ratings score of C+. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.
You can view the full analysis from the report here: MON